Kuwait – Tax cards and tax declarations

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Corporate income tax – changes to tax card procedures

On 1 January 2017, the Ministry of Finance (MOF) amended the rules4 regarding tax cards issued to foreign companies that are subject to Corporate Income Tax (CIT) in Kuwait. Changes to the rules are as follows:

Tax cards will be issued annually, valid up to 31 December of each year. The MOF has issued tax cards for tax-registered companies for the year ending 31 December 2017.

Tax cards would be renewed each year by submitting an application issued by the MOF for this purpose.

The MOF has confirmed that government entities, and public and private Companies are prohibited from dealing with any corporate body that does not hold a valid tax card.

A temporary concession is provided for companies that are starting up their business in Kuwait and are in the process of registration with the MOF and obtaining their tax card.

Tax card holders are required to return their tax cards to the MOF when they cease activities in Kuwait.

Tax cards are not to be considered as approval for the release of tax retention amounts or evidence for clearance of tax liabilities.

Tax cards no longer required for Kuwaiti companies

The MOF also cancelled a rule5 that required public and closed Kuwaiti shareholding companies to apply for tax cards for Zakat and the National Labor Support Tax (NLST) purposes. Accordingly, tax cards will no longer be issued to Kuwaiti companies.

Where a Kuwaiti company has a foreign shareholder that is subject to CIT, the foreign shareholder should apply for a tax cards for corporate income tax, as discussed above.

Electronic submission of tax declaration summaries

For CIT, Zakat and NLST declarations filed as of January 2017, the MOF has requested all taxpayers to provide a summarized tax form of the declarations electronically (i.e., on a CD), in addition to filing a hard copy of tax declaration with the MOF as usual. Some procedural aspects of these requirements are not yet clarified. These requirements suggest that the MOF may be looking to implement an electronic filing system and is starting to gather data for this purpose.

KDIPA also introduced an option for investors to apply for a 100-percent foreign- (non-GCC-) owned Kuwaiti entity without incentives. KPMG in Kuwait understands from KDIPA that this option would allow for greater than 49-percent foreign ownership in cases where an investor’s project does not fully qualify for the investment tax incentives (i.e. tax holiday and customs exemptions).

This area is quite new and needs to be tested as the absolute minimum requirements for KDIPA are unclear.

4 Executive Rule No. 3 relating to Law No. 2 of 2008.

5 Executive Rule No. 3 of both Law No. 46 of 2006 and Law No. 19 of 2000.